Year-end sales increased, but not by much.
During a redone shopping season, many Americans traded stores for digital outlets. And pandemic buying trends that favored household goods and food over clothing continued, according to the first sales figures from companies that monitor consumer spending.
US retail sales increased 2.4% between November 1 and Christmas Eve compared to the same period last year, according to Mastercard SpendingPulse, which monitors online and in-store spending with all forms of payment. Online sales grew 47.2% during that time, the company said. The count excludes gas and automobile sales.
This is below the 3.6% to 5.2% sales growth forecast by the National Retail Federation, a sector group, last month. A more complete picture of holiday spending will emerge in the coming weeks, as the government releases December retail sales figures and retailers report financial results.
“It will be modest compared to what we’ve seen in the past,” said Rod Sides, head of retail and distribution practice at consultancy Deloitte LLP. Sides said sales are expected to increase by a few percentage points, driven by major retailers and online retailers, as an increase in Covid-19 cases in recent months and new restrictions on public meetings weighed on results. “People who are trying to catch up” at retail, he said, “continued to try to catch up.”
The pandemic produced a season of holiday shopping for extreme winners and losers and, in many cases, reduced profits. For traditional retailers, online selling is generally less profitable than selling in stores because shipping and logistics costs increase.
How will the pandemic affect America’s retailers? As states across the country struggle to return to business, the WSJ investigates the evolving retail landscape and how consumers can shop in a post-pandemic world. Originally published on November 17th.
Among those who did well were large retailers like Amazon.com Inc.,
Walmart Inc.
and Target Corp., with agile e-commerce operations already in place before the pandemic, and those that sell products such as food, household items, holiday decorations and gymnastics supplies. Consumers spent more to decorate their homes or cook more during the pandemic. Smaller retailers, those more dependent on clothing sales or who already faced financial difficulties before the pandemic, have generally weakened this holiday season.
Between October 11 and Christmas Eve, clothing sales fell 19.1%, according to Mastercard, even with the 15.7% increase in e-commerce sales in the category. Department store sales fell 10.2%. Sales of furniture and furniture increased by 16.2% and those of home renovations increased by 14.1%, the company said.
Many shoppers avoided stores, even in the final weeks of the season, when it became more difficult to place orders online in time for Christmas. Between November 1 and December 22, online sales reached $ 171.6 billion, an increase of 32.4% compared to the same period last year, according to Adobe Analytics. Pedestrian traffic in stores has dropped compared to last year during the season, even in the past few weeks, after many retailers stopped promising online orders would arrive by Christmas. In the seven days leading up to Christmas Eve, store traffic fell 31.3% compared to last year, according to Sensormatic Solutions, which has cameras and software to track visits to thousands of malls and shopping centers.
Retailers began marketing and end-of-year promotions in early October this year to reduce overcrowding in stores and ease the burden on the e-commerce supply chain. They also increased sales to compete with Amazon’s Prime Day shopping event, which the e-commerce giant moved to October this year. Buyers started spending earlier in response, according to some sales figures. Retail sales between October 11 and December 24 grew 3%, according to Mastercard.
Some retailers and brands still face shipping problems due to online crushing.
Some customers who did not receive an order from Lego.com earlier this week received a letter from “Santa’s Lego helper” to give to the children. “The elves have been working as hard as they can, but they are out of supplies,” said the letter. “As we have to take the pieces to the North Pole and then the elves have to finish making their set, it may take a little longer.”
The unmythical reason for the delay is the overworked US postal service, said Gai Walny, the father of two boys who received the letter from Santa Claus. Walny ordered Minecraft and Star Wars Lego sets on December 1st. Lego transferred the order to the postal service system five days later, where it has been since, according to Walny’s tracking updates on the package.
“We are actually Jews,” said Walny. “The kids weren’t getting the letter anyway.” He and his wife bought other sets of Lego in stores to give their children in Hanukkah, said the co-owner of a 39-year-old truck parts company that lives in Chicago.
To help parents explain any possible delays, Lego has also sent a similar letter in recent years, said a Lego spokeswoman. The company is keeping customers informed of delays on its website, she said.
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The Post Office is facing performance pressure, similar to other operators, because of the record vacation volume, a spokeswoman said. This is compounded by the lack of temporary staff due to the increase in Covid-19, she said. “We are accepting all the volume presented to us, which adds to our challenges,” she said.
The postal service is under pressure because it is handling more overhead from United Parcel Service Inc.
and FedEx Corp.
, which limit the volume of packages they accept on their systems. After several weeks of increasing delays on all three carriers, on-time delivery rates improved in the week of December 13 to 19, according to ShipMatrix, a software provider that analyzes shipping data. “Despite such a marked improvement in the final stretch, over a million online orders are still at risk of not being delivered until Christmas Day, but many of these items are domestic purchases related to Covid-19 and not Christmas gifts”, said the company.
Retailers’ profits could be impacted by the increase online, executives and consultants said.
“We are seeing a huge negative trend in profitability,” due to the growth of e-commerce this season, said Sonia Lapinsky, managing director of retail practice at AlixPartners, a consulting firm. “Those who are doing well this year started investing in e-commerce years ago – the Walmarts, the Targets – and they had the money to do that,” she said. “Now the others are just fighting.”
Retailers are cutting costs, including reducing the hours of work available to store employees, especially small and medium-sized retailers. “The wave of seasonal hires that retailers embark on each fall in the run up to the holiday season has not occurred this year,” said a spokeswoman for the Ultimate Kronos Group, which provides mainly human resource technology and labor scheduling. for small and medium-sized traditional retailers and other businesses. This year, the number of shifts worked in retail fell 0.7% between mid-October and the week before Christmas, according to the group. In the week before Christmas, retailers had 12% fewer shifts worked compared to last year.
“There are simply fewer shifts to do,” said the spokeswoman.
Write to Sarah Nassauer at [email protected]
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